India COVID-19 Employment Law Update – No More Compulsory Payment of Wages and Salaries

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Payment of Wages and Salaries Amidst COVID 19 Not Mandatory

The Government of India, through the National Disaster Management Authority (“NDMA”), has issued an order dated May 17, 2020, relating to certain relaxations with regards to the extension of the national lockdown till May 31, 2020.

The NDMA has, through this order, canceled all its previous orders, including the one dated March 29, 2020 (“Order”).

The Order is produced  verbatim  herein  below  for  your  ready  reference:

All  the  employers,  be  it  in  the  Industry  or  in  the  shops  and commercial  establishments,  shall  make  payment  of  wages  of  their workers,  at  their  workplaces,  on  the  due  date,  without  any  deduction, for  the  period  their  establishments  are  under  closure  during  the lockdown;”

The Order led to a lot of confusion leading to the definition and interpretation of the terms ‘wages’, ‘workers’, ‘at their workplace’, ‘closure’, etc. This led to a series of litigations before the Hon’ble Supreme Court of India as well as the High Court of various states. There were a number of FIRs registered by the police against employers for not complying with the Order.

The order dated May 17, 2020, is produced  verbatim  herein  below  for  your  ready  reference:

Whereas save as otherwise provided in the guidelines annexed to this Order, all Orders issued by the NEC under Section 10(2)(1) of the Disaster Management Act, 2005, shall cease to have effect from 18.05.2020

It’s important to note that through the current MHA order dated May 17, 2020, the government has called off all its previous orders, including the Order dated March 29, 2020, that made it mandatory for the employers to pay wages to employees, irrespective of whether the workplace was functional or not. The order of May 17, 2020, does not mandate payment of wages to employees or workers. This means that employers are now back in the situation that existed before the lockdown and the imposition of the Disaster Management Act, especially with respect to the treatment of employees. This will be treated as a normal situation (no lockdown restrictions) in the relationship between the employer and employee, irrespective of the continued lockdown.

The employers may now be able to deal with employees as per the existing employment agreements, Shops and Establishment Acts and Industrial Employment Standing orders and other related laws and enactments with respect to reduction of wages, loss of pay, reduction of Holidays, leave adjustment, layoffs, retrenchment or termination. Kindly note that this relaxation is only with respect to employer and employee relationship. The employer will have to follow the MHA directions with respect to safe working conditions to start and continue operations.

Disclaimer: This update is only for information purposes and is not legal advice. You are requested to seek legal advice before you take any legal and/or business decision.

Contributed By – Jidesh Kumar, Managing Partner
& Vartika Dixit, Editor

King Stubb & Kasiva,
Advocates & Attorneys

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Tel: +91 11 41032969 | Email: [email protected]

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